GE GOVT. SERVS. v. UNITED STATES

March 31, 1992

GE GOVERNMENT SERVICES, INC., Plaintiff,
v.
THE UNITED STATES OF AMERICA, et al., Defendants.

The opinion of the court was delivered by: JOYCE HENS GREEN

MEMORANDUM OPINION

This litigation concerns the validity of a government contract award made to intervenor-defendant AUTEC Range Services ("ARS") by defendant United States Navy. Plaintiff GE Government Services, Inc. ("GEGS"), a bidder for the contract, challenges the award's validity under the Administrative Procedure Act ("APA"), as amended, 5 U.S.C. §§ 701 et seq., the Competition in Contracting Act ("CCA"), as amended, 10 U.S.C. §§ 2301 et seq., and the Federal Acquisition Regulations System ("FAR"), 48 C.F.R. Chapter 1. Specifically, GEGS claims the selection of ARS as awardee was arbitrary and capricious and tainted by bias. Plaintiff seeks an injunction nullifying the award and a declaratory judgment that the Navy either must award the contract to GEGS or must initiate a resolicitation of bids. Upon consideration of all filings in this case, including the administrative record, and after considering the evidence introduced at the hearing, including the testimony of witnesses whose credibility, demeanor, and behavior the Court has had opportunity to evaluate, judgment is entered in favor of the defendants and the intervenor-defendant and against the plaintiff.

I. PROCEDURAL HISTORY

This action commenced on February 20, 1992 with the filing of a complaint and a motion for a temporary restraining order ("TRO"). Named as defendants were the United States of America, the Secretary of the Navy, and a Contracting Officer of the Navy who participated in the contract award. The TRO motion was referred to then-motions Judge Gerhard Gesell for resolution. At a hearing held on February 21, 1992, Judge Gesell allowed ARS to intervene as a defendant and, for reasons stated in open court, denied GEGS's motion for a TRO. Immediately following the hearing, this Judge held a status conference to determine the future progress of the case.

The hearing was held on March 20 and 23, 1992 during which each side was permitted equal time to present and cross-examine witnesses, tender exhibits, and make legal arguments. Testimony concerning the alleged bias of John Keegan, a Navy employee who participated in the procurement, and concerning the decisionmaking process which led to the naming of ARS as the contract awardee was proffered and is described below.

II. FACTUAL FINDINGS

A. The AUTEC Program

The Atlantic Undersea Test and Evaluation Center ("AUTEC"), a United States Navy deepwater testing and evaluation facility, is headquartered in West Palm Beach, Florida and has a test range operations base on Andros Island, Commonwealth of the Bahamas. The Navy uses AUTEC, inter alia, to evaluate anti-submarine warfare combat systems and weapons, to test torpedo performance, to calibrate sonar systems, and to collect underwater, surface, and in-air tracking data on ships, submarines, aircraft, and weapon systems. Administrative Record ("A.R.") Tab 12A at 8; A.R. Tab 28 at 4; Plaintiff's Exh. 1.

The responsibility for overall technical, administrative, operational, and financial control of AUTEC has been delegated by the Commander of the Naval Underwater Systems Center ("NUSC") in Newport, Rhode Island to the AUTEC Program Manager, and the Navy employs a civilian contractor to carry out the day-to-day activities required to meet overall objectives of the AUTEC project. A.R. Tab 7 at 7. Because AUTEC's Andros Island facility is designed to be self-sufficient, the duties of the civilian contractor range from operation and maintenance of technical programs to the management of food and laundry services, housing, and utilities operations.

GEGS's corporate predecessor first began providing maintenance and operation ("M & O") services to AUTEC when the center commenced operations twenty-five years ago, and continued performing such services as GEGS, which was most recently awarded a five-year AUTEC contract in 1986. Because that contract is scheduled to expire on March 31, 1992, the Navy began preparations in the Fall, 1990 for issuance of a new contract to take effect on April 1, 1992.

B. Relevant Procedures Governing the AUTEC Contract Procurement

Basic guidance for all or most governmental contracting procedures is provided by the Federal Acquisition Regulations System, 48 C.F.R. Chapter 1. For purposes of defense contracts, the Department of Defense has interpreted and implemented the FAR, creating what is known as the Department of Defense Federal Acquisition Regulations System ("DFAR"). In turn, the Navy determines which FAR and DFAR provisions are particularly appropriate to its contracting decisions and further clarifies those provisions in the Navy's Acquisition Procedures and Supplement ("NAPS").

Because the AUTEC contract did not involve a major weapon systems acquisition, procurement in this case came under the jurisdiction of NAVSUP, and NAVSUP delegated part of its contracting authority to its contracting office in Orlando, Florida, the Naval Training Systems Center ("NTSC"). NAVSUPINST 4200.79 required NTSC to employ a panel to evaluate the contract proposals in a fashion similar to the manner in which a Source Selection Evaluation Board ("SSEB") reviews proposals for major weapon systems contracts, and to utilize another panel which would evaluate proposals in a manner similar to the methods a Source Selection Advisory Council ("SSAC") uses to review a major weapon systems contract. Additionally, NAVSUPINST 4200.79 required the appointment of an evaluation chairman to provide oversight and review of the procedures employed by the evaluation panels and to report and provide information to the Contracting Officer at NTSC. For purposes of the AUTEC contract, the evaluation chairman, or Source Selection Authority ("SSA"), was John Keegan. Although the NTSC could have named the evaluation panels and chairman differently, upon creation of the panels, it decided to give them the same titles used to describe actors employed in major weapon systems procurement, i.e., "SSEB," "SSAC," and "SSA."

It is important to note that the panels and chairman in this case did not have the same authority as their similarly named counterparts who participate in major weapon systems procurements. Unlike the procedures used in a major weapon systems acquisition, the SSA in this case was required to report his decision to the NTSC Contracting Officer, Paul Brothers, who in turn, was charged with reviewing the SSA's decision paper in its entirety and determining if the decision was properly substantiated by the SSEB and the SSAC reports. Under NAVSUPINST 4200.73, the Contracting Officer is personally accountable and liable for all contracts he reviews and subsequently signs. Although the regulations may allow the Contracting Officer to delegate his responsibilities to the SSA, in this case, the Contracting Officer made no such delegation.

The regulations applicable to the AUTEC procurement also required the Contracting Officer to obtain review and approval of his decision by the Commanding Officer of NTSC, Michael Kalapos. Thereafter, if Captain Kalapos agreed with Mr. Brother's decision, he was to submit his findings in a "Business Clearance Memorandum" to the NAVSUP Competition Advocate, Mr. Mackinson. As testified at the hearing and as the regulations make clear, Mr. Mackinson was vested with the ultimate authority to reject or accept the decisions of the SSA, the Contracting Officer, and the Commanding Officer. The final agency decision to award the AUTEC contract to ARS was made by Mr. Mackinson in his capacity as the NAVSUP competition advocate.

B. Solicitation, Submission, and Review of Bids for the AUTEC Contract

On November 30, 1990, the Navy issued a "Source Selection Plan" (A.R. Tab 7), which articulated the type of contract to be awarded in this case, listed internal administrative procedures to be followed, set an overall operating schedule, assigned certain responsibilities, and summarized evaluation criteria applicable to the selection of the AUTEC contract awardee. According to the plan, the contract to be awarded was to be of a "cost plus fee award" type, i.e., the contractor would be paid a "base fee," a fixed amount which does not vary with performance, and an "award fee," an amount determined subjectively following evaluation of performance as measured against performance criteria set forth in the contract.

In early 1991, pursuant to § 2.1 of the Source Selection Plan, the Navy issued a Request for Proposals ("RFP") which solicited competitive bids for the new AUTEC contract. Section M of the ...

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